Here’s a structured overview of key crypto chart trading patterns, categorized by reversal and continuation signals, with actionable insights:
Reversal Patterns (Signal Trend Changes)
1. Head and Shoulders / Inverse Head and Shoulders
- Head and Shoulders:
- Structure: Three peaks (left shoulder, head, right shoulder) with the middle peak highest.
- Signal: Bearish reversal after price breaks below the neckline.
- Inverse Head and Shoulders:
- Structure: Three troughs (left shoulder, head, right shoulder) with the middle trough lowest.
- Signal: Bullish reversal after price breaks above the neckline.
- Confirmation: Volume spikes on breakout; price target = head-to-neckline distance projected from breakout point.
2. Double Top / Double Bottom
- Double Top:
- Structure: Two peaks at similar resistance levels.
- Signal: Bearish reversal confirmed by breakdown below the neckline (support between peaks).
- Double Bottom:
- Structure: Two troughs at similar support levels.
- Signal: Bullish reversal confirmed by breakout above the neckline (resistance between troughs).
- Volume: Declining volume on second peak/trough strengthens validity.
3. Triple Top / Triple Bottom
- Triple Top:
- Structure: Three failed attempts to break resistance.
- Signal: Bearish reversal after breakdown below support line.
- Triple Bottom:
- Structure: Three tests of support before reversal.
- Signal: Bullish reversal confirmed by breakout above resistance.
- Volume: Should decrease with each successive peak/trough.
4. Saucer Patterns
- Shallow Saucer:
- Structure: Gentle rounding bottom with rising volume.
- Signal: Bullish reversal after breakout above neckline.
- Deep Saucer:
- Structure: Pronounced rounding bottom with volume surge near neckline.
- Signal: Strong bullish reversal upon breakout.
Continuation Patterns (Signal Trend Resumption)
1. Triangles
- Ascending Triangle:
- Structure: Flat resistance + rising support.
- Signal: Bullish breakout (price targets = triangle height).
- Descending Triangle:
- Structure: Flat support + declining resistance.
- Signal: Bearish breakdown.
- Symmetrical Triangle:
- Structure: Converging support/resistance.
- Signal: Breakout direction determines trend (watch volume).
2. Flags and Pennants
- Bullish Flag:
- Structure: Sharp rally (pole) + downward consolidation (flag).
- Signal: Upside breakout resumes uptrend.
- Bearish Flag:
- Structure: Sharp drop + upward consolidation.
- Signal: Downside breakdown continues downtrend.
- Pennants:
- Structure: Small symmetrical triangle after strong move.
- Signal: Breakout in trend direction.
3. Channels
- Channel Up:
- Structure: Parallel rising support/resistance.
- Signal: Buy near support, sell near resistance.
- Channel Down:
- Structure: Parallel declining support/resistance.
- Signal: Short near resistance, cover near support.
Key Execution Tips
- Confirmation: Wait for breakout candle to close beyond pattern boundaries.
- Volume: Validate breakouts with rising volume (e.g., ascending triangle breakout with volume spike).
- False Breakouts: Use 1-3% penetration filters or retests of breakout levels.
- Targets: Measure pattern height (e.g., head-to-neckline) and project from breakout